Jump to ContentJump to Main Navigation
Show Summary Details
More options …

The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan

IMPACT FACTOR 2018: 0.173
5-year IMPACT FACTOR: 0.248

CiteScore 2018: 0.24

SCImago Journal Rank (SJR) 2018: 0.163
Source Normalized Impact per Paper (SNIP) 2018: 0.186

Mathematical Citation Quotient (MCQ) 2018: 0.08

See all formats and pricing
More options …

Strategic Activism in an Uncertain World

Allard van der Made
  • Corresponding author
  • IEEF, Rijksuniversiteit Groningen Faculteit Economie en Bedrijfskunde, Nettelbosje 2, Groningen 9747AE, Netherlands
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2019-09-20 | DOI: https://doi.org/10.1515/bejte-2018-0103


We model private politics in the presence of two-sided incomplete information. An interest group (IG) threatens to inform consumers about a firm’s damaging technology should the firm not adopt a clean technology. The IG does not know how costly adopting the clean technology is and the firm does not know how much the IG cares about the damages. In equilibrium an IG who cares a lot signals its type to the firm and the firm is more inclined to adopt the clean technology if it receives such a signal. However, impasses can occur: the firm does not adopt the clean technology despite the fact that the IG has signaled that it cares a lot and threatens to inform a large fraction of the consumer population. The IG never informs all consumers: as soon as a certain fraction of the consumers is informed by the IG the firm reduces its price and thereby reveals to the remaining consumers that it is employing a damaging technology. The IG’s actions increase consumer well-being, but decrease total welfare unless the cost of adopting the clean technology is likely to be low. Yet, since the IG is inclined to target firms with this property, a regulator might want to delegate information provision to the IG.

Keywords: asymmetric information; impasses; interest groups; private politics; technology adoption

JEL Classification: D80; L10; L31


  • Baron, D. 2001. “Private Politics, Corporate Social Responsibility, and Integrated Strategy.” Journal of Economics and Management Strategy 10: 7–45.CrossrefGoogle Scholar

  • Baron, D. 2003. “Private Politics.” Journal of Economics and Management Strategy 12: 31–66.CrossrefGoogle Scholar

  • Baron, D. 2009. “A Positive Theory of Moral Management, Social Pressure, and Corporate Social Performance.” Journal of Economics and Management Strategy 18: 7–43.Web of ScienceCrossrefGoogle Scholar

  • Baron, D. 2011. “Credence Attributes, Voluntary Organizations, and Social Pressure.” Journal of Public Economics 95 (11–12): 1331–38.Web of ScienceCrossrefGoogle Scholar

  • Bottega, L., and J. de Freitas. 2009. “Public, Private and Nonprofit Regulation for Environmental Quality.” Journal of Economics & Management Strategy 18 (1): 105–23.Web of ScienceCrossrefGoogle Scholar

  • Cho, I.-K., and D. Kreps. 1987. “Signaling Games and Stable Equilibria.” Quarterly Journal of Economics 102: 179–221.Google Scholar

  • Darby, M., and E. Karni. 1973. “Free Competition and the Optimal Amount of Fraud.” Journal of Law and Economics 16: 67–88.CrossrefGoogle Scholar

  • Eesley, C., and M. Lenox. 2006. “Firm Responses to Secondary Stakeholder Action.” Strategic Management Journal 27: 765–81.CrossrefGoogle Scholar

  • Feddersen, T., and T. Gilligan. 2001. “Saints and Markets: Activists and the Supply of Credence Goods.” Journal of Economics and Management Strategy 10: 149–71.CrossrefGoogle Scholar

  • Fudenberg, D., and J. Tirole. 1991 Game Theory. Cambridge, MA: The MIT Press.Google Scholar

  • Gupta, S., and R. Innes. 2014. “Private Politics and Environmental Management.” Journal of Environmental Economics and Management 68: 319–39.CrossrefWeb of ScienceGoogle Scholar

  • Heijnen, P. 2013. “Informative Advertising by Environmental Groups.” Journal of Economics 108: 249–72.CrossrefGoogle Scholar

  • Krautheim, S., and T. Verdier. 2016. “Offshoring with Endogenous NGO Activism.” Journal of International Economics 101: 22–41.Web of ScienceCrossrefGoogle Scholar

  • Lewis, T. 1996. “Protecting the Environment when Costs and Benefits are Privately Known.” RAND Journal of Economics 27: 819–47.CrossrefGoogle Scholar

  • Milgrom, P., and J. Roberts. 1986. “Price and Advertising Signals of Product Quality.” Journal of Political Economy 94: 796–821.CrossrefGoogle Scholar

  • Moraga-González, J., and N. Padrón-Fumero. 2002. “Environmental Policy in a Green Market.” Environmental and Resource Economics 22: 419–47.CrossrefGoogle Scholar

  • O’Rourke, D. 2005. “Market Movements: Nongovernmental Organization Strategies to Influence Global Production and Consumption.” Journal of Industrial Ecology 9 (1–2): 115–28.Google Scholar

  • Rogoff, K. 1985. “The Optimal Degree of Commitment to an Intermediate Monetary Target.” Quarterly Journal of Economics 100: 1169–89.CrossrefGoogle Scholar

  • Spar, D., and L. La Mure. 2003. “The Power of Activism: Assessing the Impact of NGOs on Global Business.” California Management Review 45: 78–101.CrossrefGoogle Scholar

About the article

Published Online: 2019-09-20

Funding Source: Netherlands Organization for Scientific Research (NWO)

Award identifier / Grant number: 400-04-135

Financial support by the Netherlands Organization for Scientific Research (NWO) (Funder Id: http://doi.org/10.13039/501100003246, Grant Number: 400-04-135) is gratefully acknowledged.

Citation Information: The B.E. Journal of Theoretical Economics, Volume 20, Issue 1, 20180103, ISSN (Online) 1935-1704, DOI: https://doi.org/10.1515/bejte-2018-0103.

Export Citation

© 2019 Walter de Gruyter GmbH, Berlin/Boston.Get Permission

Comments (0)

Please log in or register to comment.
Log in